So, You Think Measuring Marketing Performance Is Hard?

Not a week goes by that I don’t see, hear, read, or preach on the topic of measuring marketing results. From equating Marketing ROI to The Holy Grail, to sticking my tongue in my cheek to the point of meanness when it comes to a “simple” process for establishing corporate metrics, to mulling over Marketing ROI vs. Marketing Accountability, there really is no end to the real-world examples that warrant commentary. The reason? Because it’s hard to figure out how to measure marketing’s impact in a meaningful way. It can be done, and it needs to be done, but it requires having a very clearly defined strategy and objectives to do it well, and, even then, the measurement is not as perfect and precise as we would like it to be.

So…it’s hard. I agree.

Try being a non-profit.

I do some volunteer work with the United Way of Central Ohio. Specifically, I sit on the Meeting Emergency and Short Term Basic Needs Impact Council, as well as the Emergency Food, Shelter, and Financial Assistance Results Committee that reports into that impact council, as well as the Emergency Food, Shelter, and Financial Assistance Performance Measures Ad Hoc Committee, which reports into the results committee. Yeah. A mouthful, to say the least. But, it’s the ad hoc committee that has been doing the most tangible work of late and, lookie there!, it’s a committee geared towards performance measurement. Some of the work of that committee inspired an Outputs vs. Outcomes post earlier this year. I find a lot of parallels between measurement in the non-profit world and measurement in the Marketing world.

One difference is that, while Marketers (broad generalization alert!) typically view measurement as a necessary evil — they do want to be data-driven, and they understand the conceptual value of doing measurement…but it’s simply not baked into their DNA to truly want to do it — nonprofits increasingly view measurement as a necessity. (At least) two reasons for this:

In the nonprofit world, resources are pretty much infinitely scarce — no agency has a real surplus of the services they supply; if they actually get to a point where they’ve got one area reasonably well covered…they expand their offering to meet other needs of their clients

Donors want to know that their investment is making a difference — on the surface, this may seem similar to investors in a publicly held company; but, investors look at revenue, profitability and growth — financial measures — much more than they scrutinize “Marketing” results (although the “average tenure of a CMO is 27 months” is a stat that gets bandied around quite a bit, so there is some flow down the chain of command to Marketing for accountability); donors to nonprofits are scrutinizing “results” that need to be tied to the agency’s efforts (their investment) and meaningful in an oftentimes relatively soft context

As more and more nonprofits are being driven to collaborate to gain efficiency, more of them are working with foundations or some sort of umbrella organizing/coordinating entity. The Community Shelter Board in Columbus is a really good example of this. It’s an organization that, on its own, does not provide any direct services…but most of the homeless shelters in the area receive funding and some level of direction from the organization. And they do some pretty nice quarterly indicator reports — using plain ol’ Excel. They do it right by: 1) choosing metrics that matter and balance each other, 2) setting targets for those metrics and assessing each metric against its target, and 3) providing a contextual analysis of the results for each set of metrics. Two thumbs up there.

Right now, the United Way of Central Ohio is trying to do something similar — narrowing its focus, establishing clear strategies in each area, and then honing in on meaningful performance measures for each strategy. It’s a fairly grueling exercise, but well worth undertaking. We constantly find ourselves battling the tendency to broaden the scope of a strategy — it’s hard to find any nonprofit that isn’t doing good work, but trying to support “everything that is good” means not really moving any of the needles in a meaningful way.

One similarity I’ve seen between the non-profit world and Marketing in the for-profit world has to do with capturing data. I touched on this in my post on being data-oriented vs. process-oriented. When trying to establish good, meaningful metrics, it can be very tempting to envision ways the data you want would be captured through a minor process change: “When the inside sales representative answers the phone, we will have him/her ask the caller where they heard about the company and get that recorded in the system so we’ll be able to tie the caller back to specific (or at least general) Marketing activity” or “In order to verify that our agency referral program is working, we’ll call the client we referred 1-2 weeks after the referral to find out if the referral was appropriate and got them the services they needed.” This is dangerous territory. The reason? In both cases, you’re inserting overhead in a process that is not inherently and immediately valuable to person using the process. Sure, it’s valuable in that you can sit back and assess the data later and determine what is/is not working about the process and use that information to come back and make improvements…but that’s an awfully abstract concept to the person who is answering the telephone day in and day out (in both of the above examples). I’ll take an imperfect proxy metric that adds zero overhead to the process that generates it any day over a more perfect metric that requires adding “jus’ a li’l” complexity to the process. And, you know what? My metric will be more accurate!